New York Forex Report: US ISM Manufacturing Data Next

Into the close on Friday we saw market optimism over a December Fed rate hike once again dampened by the slew of weaker than expected US data that showed softer gains in personal income and spending while core PCE failed to pick up. Market expects similar rapid shift in hike-no hike expectations to continue until the Fed finally act, if at all. Despite mounting talks of a possible increase in BOJ’s asset purchases, BOJ refrained from adding QE at last Friday’s meeting but policy bias remains clearly titled towards easing amid softer growth and price outlook. China’s PMI prints also added to the case of a bleak growth picture, as manufacturing index contracted for a third straight month and services index grew at a slower pace. Despite last week’s losses however, the US Dollar has so far rebounded over the European morning whilst commodities remain soft amid a tentative risk environment driven by further Chinese data weakness.

EURUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental: EUR saw choppy trading over the European session though ultimately was lower heading into the American cross-over as European equities traded higher, presumably driven by the assumption that further deterioration in risk sentiment supports likelihood of EZ QE in December. US ISM Manufacturing data is the key data in today;s American session, expected to contract to 50 from 50.2 previous.

Technical: Today while 1.0950 caps intraday downside reactions anticipate a broader corrective pattern targeting 1.1130. Failure at 1.0950 sets up a retest of last weeks lows en route to 1.0860

Interbank Flows: Bids 1.0950 stops below. Offers 1.11 Stops above.
Retail Sentiment: Neutral to bullish
Trading Take-away: Long against 1.0950 targeting 1.1130

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GBPUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental: Sterling was higher over the European morning as October manufacturing PMI data showed an unexpected surprise to the upside, beating expectations of 51.3 to print 55.5, encouraging UK bulls ahead of the BOE meeting this Thursday.

Technical:  The upside rotation back through 1.53 resets bullish expectations for a test of 1.56. Another failure at 1.53 targets stops sub 1.52 next.

Interbank Flows: Bids 1.52 stops below. Offers 1.55 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Venture long back through 1.5330 targeting 1.56

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USDJPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental: JPY was weaker against the US Dollar over the European morning as the Dollar rebounded from the overnight lows posted as the Yen strengthened on the back of weaker than expected China PMI data.

Technical: Bulls target a sustained break of 121 to target range highs at 121.85 an intraday failure at 120.00 would suggest return to range.

Interbank Flows: Bids 119.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Neutral
Trading Take-away: Buy pullbacks against 120.50 targeting upside range break

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EURJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: EURJPY remains thoroughly range-bound heading into the New York open with both EUR and JPY weak so far today in European trading.

Technical:  Bears now target equality corrective objective at 131.20, only a close above 133.50 eases immediate bearish pressure.

Interbank Flows: Bids 131.00 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

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AUDUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental: The Aussie remains very tentative ahead of tonight’s RBA meeting, which although not expected to see further cutting of the Australian headline rate, presents clear risks. Soft commodities over European trading keeping upside capped for now also.

Technical: Buyers emerge at retest of pivotal .7030/50 next, failure here firmly re-establishes the bearish tone and opens a retest of 2015 lows and potential broader bearish trend continuation move.

Interbank Flows: Bids .7050 stops below. Offers .7210 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

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USDCAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish

Fundamental: Oil has traded sharply lower over the European morning with weakness stemming from the weak Chinese PMI data overnight, seeing USDCAD regaining losses posted into Friday’s close. Canadian manufacturing data at 1430 GMT is the key domestic data for today’s American session

Technical:1.3260 provides decent resistance as anticipated as this area contains upside potential for another leg of corrective downside. A close above 1.3280 eases bearish pressure and resets focus on the 2015 highs and stops above.

Interbank Flows: Bids 1.3090 stops below. Offers 1.3260 stops above
Retail Sentiment: Bearish
Trading Take-away: Sell a double top test and hold against 1.3280 for another leg lower

uc2015-11-02 08_35_49-NetDania - NetStation

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